The project was first announced in November 16 last year. It has achieved the objectives of producing a digital representation of the Singapore dollar for interbank settlement, testing methods of connecting bank systems to a DLT, and making the MAS Electronic Payment System (MEPS+) interoperate with the DLT for automated collateral management.

The consortium has also commissioned Deloitte to author a report that covers the aspects of DLT that are most suited to settlement systems and details the design principles used for the prototype.

The white paper, titled The Future is Here – Project Ubin: SGD on Distributed Ledger, noted that while DLT is by no means a one-size fits all solution, it has the potential to change the way business is done. Also known as “Internet of Value”, DLT boosts efficiency, security and transparency of transactional activities.

MAS has been developing a payment system prototype in which users can exchange currency with one another without lengthy processing times, expensive processing fees or intermediaries, said Deloitte.

It added that MAS will act as a settlement agent, operator and overseer of payment, clearing and settlement systems in Singapore that focus on safety and efficiency. To do that, MAS partnered with R3, a consortium in DLT, in an initiative called Project Ubin. The initiative is also in line with Singapore’s goal of becoming a Smart Financial Centre. MAS is using Project Ubin to evaluate the implications of having the Singapore Dollar on a distributed ledger, and its potential benefits to Singapore’s financial ecosystem.

The white paper said that the rise of peer-to-peer networks, public key cryptography and consensus algorithms have pushed for DLT projects. At least 24 countries are currently investing in Blockchain technology, a type of distributed ledger that supports the Bitcoin cryptocurrency, while 80 percent of banks are predicted to initiate DLT projects by this year, said Deloitte as it cited a 2016 World Economic Forum report.

Image via Monetary Authority of Singapore (MAS)

Other than cross border payment, Deloitte highlighted that Digital Identity, Smart Contracts and Record Keeping are possible offshoots of DLT and its use extends beyond the financial industry. MAS believes that issues such as interoperability between platforms, appropriate privacy levels, identification of relevant parties and proven ability to scale and upgrade over time need to be addressed before DLT is adopted.

Image via Monetary Authority of Singapore (MAS)

MAS has plans for two spin-off projects that will leverage the lessons of the inter-bank payments project. The first project, driven by the Singapore Exchange (SGX), focuses on making the fixed income securities trading and settlement cycle more efficient through DLT. The second project focuses on new methods to conduct cross border payments using central bank digital currency.

MAS is in the early stages of discussions to develop links from Singapore to other countries using DLT to allow cross-border payments to settle directly using central bank accounts.

Sopnendu Mohanty, Chief FinTech Officer, MAS, said:

“This wholesale payments project has demonstrated the commitment of MAS and the industry to co-create concrete use-cases for technologies such as DLT. Already, some institutions have embarked on projects that are inspired by this collaboration,”

“We look forward to the next phases of our project which will develop trial applications for securities settlement and cross border payments.” said Mohanty.

Tim Grant, CEO of R3’s Lab and Research Center, who is also a member of MAS’ International Technology Advisory Panel, said:

“We have always believed that true progress in advancing the implementation of distributed ledger technology in financial services would be achieved by bringing central banks, commercial banks and technology partners together in an open setting.”

“This effort has confirmed that harnessing the power of collaborative networks can yield demonstrable results and we hope that the progressive stance of all the participants in this project, and especially that of MAS, will inspire similar work in other jurisdictions going forward.” said Grant.